A dispute between the governments of Germany and Libya is preventing the European Union (EU) from lifting an arms embargo on the Arab state.

"We don't have a problem with it except that it would need agreement with our European partners," said British Trade Minister, Mike O'Brien, in AFP. He said the arms embargo will remain intact until Germany agrees to lift it.

The government official did not elaborate on the dispute with Libya, but sources say it is related to Germany's demand for compensation for the victims of a 1986 nightclub bombing in West Berlin.

In September, the United Nations (UN) Security Council ended 11-year-old sanctions against Libya, imposed in response to the 1988 bombing of a US airliner over Lockerbie, Scotland. The lifting of the embargo paved the way for the release of $2.7 billion in compensation for the families of the more than 270 victims of the Pan Am 103 attack.

According to Western sources, Libya is reviewing its military needs after it aborted its programs for weapons of mass destruction (WMD) capabilities in December. O'Brien stressed that even if the arms embargo is lifted, arms sales to Libya would be controlled by an EU defense sales code that ensures weapons purchased are not used for internal repression of international instability.

Libya's decision to surrender its WMD has opened the lines of communications between the Arab state and the West, particularly the United States. US oil companies, which had operated in Libya prior to the imposition of sanctions, are now able to negotiate their return to the oil-rich country. US officials said on Monday that many of its economic sanctions could be lifted as early as this week. — (menareport.com)